Economics analyses what, how, and for whom society produces. A scarce resource is one for which the demand at a zero price would exceed the available supply Transfer payments are payments made to individuals without requiring the provision of any service in return. Law of diminishing returns - each additional worker adds less to total industry than the previous one Trade-off - by transferring workers from one industry to the other, the economy can produce more of one good, but only at the expense of producing less of the other good Production possibility frontier shows the maximum combinations of output that the economy can produce using all available resources, it presents a trade-off A market is a shorthand expression for the process by which households´ decisions about consumption of alternative goods, firms´ decisions about what and how to produce, and workers´decisions about how much and for whom to work are all reconciled by adjustment of prices. A market is a set of arrangements by which buyers and sellers are in contact to exchange goods or services. Positive economics deals with objective or scientific explanations of the working of the economy. It studies how the economy actually behaves. Normative economics offers prescriptions or recommendations based on personal value judgements. It makes prescriptions about what should be done. Microeconomic analysis offers a detailed treatment of individual decisions about particular commodities Macroeconomics emphasizes the interactions in the economy as a whole. It deliberately simplifies the individual building blocks of the analysis in order to retain a manageable analysis of the complete interaction of the economy. A model or theory makes a series of simplifying assumptions from which it deduces how people will behave. It is a deliberate simplification of reality. An index number expresses data relative to a given base value. The retail price index is used to measure changes in the cost of living, the money that must be spent to purchase the typical bundle of goods consumed by a representative household. Real earnings are calculated by adjusting nominal earnings for changes in the cost of living. Demand is the quantity of a good buyers wish to purchase at each conceivable price Supply is the quantity of a good sellers wish to sell at each conceivable price The demand curve shows the negative relation between price and quantity demanded, holding other things equal. The supply surve shows the relation between price and quantity supplied, holding other things constant. Market equilibrium is where the curves DD and SS intersect. A normal good is a good for which demand increases when incomes rice. An inferior good is a good for which demand falls when incomes rise. The price elasticity of demand (supply) is the percentage change in the quantity of a godd demanded (supplied) by the corresponding percentage change in its price. The budget constraint describes the different bundles that the consumer can afford. The slope of the budget line depends only on the ration of the prices of the two goods. The marginal rate of substitution of meals for films is the quantity of films the consumer must sacrifice to increase the quantity of meals by one unit without changing total utility.
Consumer tastes exhibit a diminishing marginal rate of substitution when, to hold utility constant, diminishing quantities of one good must be sacrificed to obtain successive equal increases in the quantity of the other good. An indiferent curve shows all the consumption bundles which yield the same utility to the consumer. A firm’s revenue is the amount it earns by selling goods or services in a given period such as a y
A scarce resource is one for which the demand at a zero price would exceed the available supply
Transfer payments are payments made to individuals without requiring the provision of any service in return.
Law of diminishing returns - each additional worker adds less to total industry than the previous one
Trade-off - by transferring workers from one industry to the other, the economy can produce more of one good, but only at the expense of producing less of the other good
Production possibility frontier shows the maximum combinations of output that the economy can produce using all available resources, it presents a trade-off
A market is a shorthand expression for the process by which households´ decisions about consumption of alternative goods, firms´ decisions about what and how to produce, and workers´decisions about how much and for whom to work are all reconciled by adjustment of prices.
A market is a set of arrangements by which buyers and sellers are in contact to exchange goods or services.
Positive economics deals with objective or scientific explanations of the working of the economy. It studies how the economy actually behaves.
Normative economics offers prescriptions or recommendations based on personal value judgements. It makes prescriptions about what should be done.
Microeconomic analysis offers a detailed treatment of individual decisions about particular commodities
Macroeconomics emphasizes the interactions in the economy as a whole. It deliberately simplifies the individual building blocks of the analysis in order to retain a manageable analysis of the complete interaction of the economy.
A model or theory makes a series of simplifying assumptions from which it deduces how people will behave. It is a deliberate simplification of reality.
An index number expresses data relative to a given base value.
The retail price index is used to measure changes in the cost of living, the money that must be spent to purchase the typical bundle of goods consumed by a representative household.
Real earnings are calculated by adjusting nominal earnings for changes in the cost of living.
Demand is the quantity of a good buyers wish to purchase at each conceivable price
Supply is the quantity of a good sellers wish to sell at each conceivable price
The demand curve shows the negative relation between price and quantity demanded, holding other things equal.
The supply surve shows the relation between price and quantity supplied, holding other things constant.
Market equilibrium is where the curves DD and SS intersect.
A normal good is a good for which demand increases when incomes rice.
An inferior good is a good for which demand falls when incomes rise.
The price elasticity of demand (supply) is the percentage change in the quantity of a godd demanded (supplied) by the corresponding percentage change in its price.
The budget constraint describes the different bundles that the consumer can afford. The slope of the budget line depends only on the ration of the prices of the two goods.
The marginal rate of substitution of meals for films is the quantity of films the consumer must sacrifice to increase the quantity of meals by one unit without changing total utility.
Consumer tastes exhibit a diminishing marginal rate of substitution when, to hold utility constant, diminishing quantities of one good must be sacrificed to obtain successive equal increases in the quantity of the other good.
An indiferent curve shows all the consumption bundles which yield the same utility to the consumer.
A firm’s revenue is the amount it earns by selling goods or services in a given period such as a y